ETS Would Cost Chinese Airlines $123 Million In 2012

China and the US are competitors in many ways, but they're on the same side of the fight against the European Union's proposed Emission Trading System (ETS) for foreign airlines, set to go into effect January 1. China says its aviation watchdog Tuesday urged the European Union to drop the plan, while Chinese airlines plan to sue the EU over the scheme.

An official with the Civil Aviation Administration of China (CAAC), who asked to remain anonymous, told the Xinhua news agency, "We hope the EU will avoid this unilateral move, solve international aviation emissions issues on the basis of mutual respect and consensus, and promote the sustainable development of the industry."

The CAAC says it welcomes and supports a similar resolution adopted by the International Civil Aviation Organization (ICAO) regarding the issue. Xinhua reports that according to the EU plan, airlines flying to or from the EU bloc will have to buy permits for 15 percent of the carbon emissions they generate during the entire flight, with large fines for noncompliance. The US House of Representatives recently passed a bill which seeks to prohibit US airlines from paying the fees.

China, like the US and two dozen other nations which have protested, holds that the EU's move is unilateral in nature and violates state sovereignty. Russia issued a joint statement with China in September, saying the move infringes upon other countries' sovereignty and burdens global air carriers.

It is estimated that the ETS will cost Chinese airlines an additional 800 million yuan (US$123 million) in the first year it goes into effect, and a total of 17.6 billion yuan by 2020.

FMI: http://ec.europa.eu/clima/policies/ets/index_en.htm